Cover IMF Working Papers
Buy Book in Print
Unveiling the Dance of Commodity Prices and the Global Financial Cycle
Author:
Luciana Juvenal https://isni.org/isni/0000000404811396 International Monetary Fund

Search for other papers by Luciana Juvenal in
Current site
Google Scholar Close
and
Ivan Petrella
Search for other papers by Ivan Petrella in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 2024: Issue 082
Language:
English
Publication Date:
05 Apr 2024
DOI:
https://doi.org/10.5089/9798400271618.001
ISBN:
9798400271618
ISSN:
1018-5941
Pages:
61
Keywords:
risk appetite; energy commodity; commodity channel; commodity price instrument; commodity event; impact of commodity price fluctuation; commodity export; fluctuations in commodity price; monetary policy shock; commodity prices to shock; interaction term; commodity prices to a BAA; commodity c; Commodity prices; Export prices; Capital flows; Commodity price shocks; Commodity price fluctuations; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (4 MB) Download Epub
We examine the impact of commodity price changes on the business cycles and capital flows in emerging markets and developing economies (EMDEs), distinguishing between their role as a source of shock and as a channel of transmission of global shocks. Our findings reveal that surges in export prices, triggered by commodity price shocks, boost domestic GDP, an effect further amplified by the endogenous decline of country spreads. However, the effects on capital flows appear muted. Shifts in U.S. monetary policy and global risk appetite drive the global financial cycle in EMDEs. Eased global credit conditions, attributed to looser U.S. monetary policy or lower global risk appetite, lead to a rise in export prices, higher output, a decrease in government borrowing costs, and stimulate greater capital flows. The endogenous response of export prices amplifies the output effects of a more accommodative U.S. monetary policy while country spreads magnify the impact of shifts in global risk appetite.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund